Markup pricing in mergers and acquisitions
Year: 1996
Type: article
Abstract: This paper studies the relation between the premiums in takeover bids involving exchange-listed target firms from 1975-91 and the pre-announcement stock price runups. The evidence shows that the pre-bid runup and the post-announcement increase in the target's stock price (the ‘markup’) are generally uncorrelated. With little substitution between the runup and the markup, the runup is an added cost to the bidder. This finding has important implications for assessing the costs of insider trading. It also raises interesting questions about the role of information from public capital markets in private takeover negotiations.
Source: Journal of Financial Economics
Author: G.William Schwert
Institutions: National Bureau of Economic Research, University of Rochester
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,740
OpenAlex ID: W2123622965